India's energy imports have been rising inexorably, amplifying its economy's vulnerability to external shocks, but that was also in good part due to inefficient use of energy, rather than greater demand in the economy. The country's energy consumption rose at a compounded annual growth rate (CAGR) of 9.96% since 2005-06, beating the GDP growth of 8.6% and raising imports of fuels like oil and coal as domestic output growth remained sluggish, a government report showed on Monday.
So, efficient use of fuels and energy itself could significantly tame India's fiscal and current account deficits by reducing energy import bill.
Data from the ministry of statistics and programme implementation (Mospi) on per capita energy consumption and energy intensity of India's GDP follows a recent Netherlands-based Ecosys’ report, “International Comparison of Fossil Power Efficiency and CO2 Intensity”, that said thermal power plants in India consume 50% more fuel to generate every unit of electricity than those in Japan, 44% more than plants in France, 36% more than those in Germany and 34% more than US power stations.
What's worrisome is that the energy intensity of India's GDP or the amount of energy needed for increasing one unit of output has gone up significantly from 0.1355 kilowatt hour per rupee since the Lehman crisis to 0.1518, indicating a less efficient use of scarce energy resources.
Economists say that while the rise in energy consumption was a consequence of rising income levels and faster development, the increase in energy intensity could be due to populist measures like free power to farmers, delays in completing projects and a slowdown in overall GDP growth. But there are also technology issues. While the maximum economically useful life of a thermal power plant is 25 years, nearly a third of India's 1.32 lakh MW of coal-fired generating capacity is well past the critical mark.
The Energy Statistics 2014 report released by MOSPI shows electricity consumption has more than doubled from 4,11,887 giga watt hours in 2005-06 to 8,35,513 GWh in 2012-13, a CAGR of 9.24% in seven years. Since 2005-06, coal consumption has grown by a CAGR of 4.3% to 570.23 million tonnes while crude oil consumption grew 6.74% to 219.21 million tonnes and natural gas was up by 3.11% to 34.30 billion cubic metres.
India's per capita energy consumption grew at a CAGR of 8.56% since 2005-06 to 6,748.61 kilo watt hour in 2012-13, almost matching the GDP growth of